Case C-67/13 P Groupement des cartes bancaires (CB) v European Commission: Failure by the General Court to observe the requisite standard of review

This post will focus of the issue of judicial review without going about a detailed presentation of the points relevant to a “by object” restriction and the application of Article 101(1) TFEU. Such presentation might follow in a later post.

The press release by the CoJ summarises the facts of the case as follows:

The ‘Groupement des cartes bancaires’ (‘the Grouping’) was created in 1984 in France so that the holders of a CB card issued by a member of the Grouping may make payments to affiliated traders and/or make withdrawals from automatic teller machines operated by the members of the Grouping. In 2002, the Grouping adopted three pricing measures: (i) a fee under MERFA (‘Mécanisme de regulation de la function acquéreur’ or ‘mechanism for regulating the acquiring function’), payable by the members of the Grouping whose CB-card issuing activity exceeded their activity in affiliating new traders to the system, (ii) a reform of the membership fee for new members, which consisted in a fixed sum and a supplementary membership fee for members whose number of CB cards in stock exceeded a certain threshold at a given moment and (iii) a fee per CB card issued, payable by ‘dormant’ members, that is those members of the Grouping who were inactive or not very active before the date of entry into force of the new pricing measures.

By decision of 17 October 20072, the Commission concluded that the pricing measures adopted by the Grouping were contrary to EU competition law because of both their object and their anti-competitive effects and required the Grouping to bring that infringement immediately to an end and to refrain from adopting any similar measure in the future. The Grouping brought an action before the General Court for the annulment of that decision. The General Court dismissed the action3 on the ground that the Commission could properly conclude that the pricing measures at issue restricted competition because of their anti-competitive object and constituted an unlawful decision of an association of undertakings. In those circumstances, the General Court found that it had no need to examine the effects of the measures on the market. The Grouping brought an appeal before the Court of Justice against the judgment of the General Court. Before the Court of Justice, the Grouping submitted, inter alia, that the General Court had erred in law in the application of the concept of the restriction of competition by object.

Regarding the issue of judicial scrutiny, the CoJ recalls its previous case-law and makes the following preliminary observations:

It follows from Article 256 TFEU and the first paragraph of Article 58 of the Statute of the Court of Justice of the European Union that the General Court has exclusive jurisdiction, first, to find the facts, except where the substantive inaccuracy of its findings is apparent from the documents submitted to it, and, second, to assess those facts. However, when the General Court has found or assessed the facts, the Court of Justice has jurisdiction under Article 256 TFEU to review the legal characterisation of those facts by the General Court and the legal conclusions it has drawn from them (see, in particular, judgment in Alliance One International and Standard Commercial Tobacco v Commission, C‑628/10 P and C‑14/11 P, EU:C:2012:479, paragraph 84).

In addition, in accordance with the rules of the EU and FEU Treaties, relating to the division of powers between the Commission and the Courts of the European Union, it is for the Commission, subject to review by the General Court and the Court of Justice, to ensure application of the principles laid down in Articles 81 EC and 82 EC (see, in particular, judgment in Masterfoods and HB, C‑344/98, EU:C:2000:689, paragraph 46).

The CoJ also recalls that the principle of effective judicial protection is a general principle of EU law to which expression is now given by Article 47 of the Charter of Fundamental Rights of the European Union (see, judgment in Chalkor v Commission, C‑386/10 P, EU:C:2011:815, paragraph 52).

Consequently, when an action is brought before it under Article 263 TFEU for the annulment of a decision applying Article 81(1) EC, the General Court must generally undertake, on the basis of the evidence adduced by the applicant in support of the pleas in law put forward, a full review of whether or not the conditions for applying that provision are met (see, judgment in Chalkor v Commission (EU:C:2011:815), paragraphs 54 and 62). The General Court must also establish that the Commission has stated reasons for its decision (see, judgment in Chalkor v Commission (EU:C:2011:815), paragraph 61).

In carrying out such a review, the General Court cannot use the margin of assessment which the Commission enjoys by virtue of the role assigned to it in relation to competition policy by the EU and FEU Treaties, as a basis for dispensing with an in-depth review of the law and of the facts (see, judgment in Chalkor v Commission (EU:C:2011:815), paragraph 62).

In particular, although the Commission has, in accordance with that role, a margin of assessment with regard to economic matters, in particular in the context of complex economic assessments, that does not mean, as is apparent from the preceding paragraph, that the General Court must refrain from reviewing the Commission’s legal classification of information of an economic nature. Although the General Court must not substitute its own economic assessment for that of the Commission, which is institutionally responsible for making those assessments (see judgment in Bertelsmann and Sony Corporation of America v Impala, C‑413/06 P, EU:C:2008:392, paragraph 145, and judgment in Frucona Košice v Commission, C‑73/11 P, EU:C:2013:32, paragraph 89 and the case-law cited), it is apparent from now well-settled case-law that not only must the EU judicature establish, among other things, whether the evidence relied on is factually accurate, reliable and consistent but also whether that evidence contains all the relevant information which must be taken into account in order to assess a complex situation and whether it is capable of substantiating the conclusions drawn from it (see, to that effect, in particular, judgment in Chalkor v Commission (EU:C:2011:815), paragraph 54).

The question of whether the General Court was correct to conclude, in the judgment under appeal, that the measures at issue have as their object the restriction of competition within the meaning of Article 81(1) EC must be examined in the light of the abovementioned principles.

Thus, applying the aforementioned principles to the present case, the CoJ finds that the General Court did not correctly assess whether there was a restriction of competition “by object”. In particular, the errors of law committed by the General Court with regard to (i) the relevant legal criteria in order to assess the existence of a restriction of competition ‘by object’, (ii) the grounds of the judgment under appeal and (iii) the characterisation of the measures at issue with regard to Article 81(1) EC indicate, in addition, a general failure of analysis by the General Court and therefore reveal the lack of a full and detailed examination of the arguments of the appellant and of the parties which sought the annulment of the decision at issue.

The Court of Justice considers that the General Court was entitled at the most to infer that the measures at issue had as their object the imposition of a financial contribution on the members of the Grouping which were content to benefit from the acquisition efforts of other members. Such an object cannot be regarded as being, by its very nature, harmful to the proper functioning of normal competition, all the more so since the General Court took the view that combatting free-riding in the CB system was a legitimate objective.

In addition, the Court of Justice finds that, while purporting to examine the ‘options’ left open to the members of the Grouping by the measures at issue (namely payment of a fee or limiting the issue of CB cards), the General Court in fact assessed the potential effects of the measures, not their object. It therefore indicated itself that the measures at issue cannot be considered ‘by their very nature’ harmful to the proper functioning of normal competition.

Using a strict language, the CoJ criticized the General Court that it simply reproduced on a number of occasions, in particular, in paragraphs 126 to 136 of the judgment under appeal, the contents of the decision at issue, and thus, it failed to review, even though required to do so, whether the evidence used by the Commission in the decision at issue enabled it correctly to conclude that the measures at issue, in the light of their wording, objectives and context, displayed a sufficient degree of harm to competition to be regarded as having as their object a restriction of competition within the meaning of Article 81(1) EC and, consequently, whether that evidence constituted all the relevant data which had to be taken into consideration for that purpose.

In those circumstances, the CoJ concluded that, in holding that the measures at issue had as their object a restriction of competition within the meaning of Article 81(1) EC, the General Court erred in law and failed to observe the required standard of review.

In view of the above, the CoJ annuls the judgment of the General Court and it refers the case back to the General Court.

We consider this judgment very important as it is the first time, we think, that the CoJ overturns a General Court judgment for… insufficient review, i.e. for failing to scrutinise the case properly. The CB judgment shows that the Chalkor poetry is not just a pretty statement but it is followed through by the CoJ with a practical result.